Experimental Studies on cross-cultural Behaviour between Germans and Chinese

Abstract

The world has never been so integrated as today. Globalization irresistibly takes place in economic, political and social areas. However, globalization does not bring unification of cultures. On the contrary, the process of globalization has always been accompanied by conflicts or even crashes of cultures. Hence, understanding the behavior of different cultural backgrounds can avoid unnecessary confusions caused by the misinterpretation of another way of thinking. A new research method in cross-cultural studies is to run laboratory experiments using comparable subject pools with different cultural backgrounds. In this dissertation, we report three cross-cultural laboratory experiments conducted between German and Chinese subjects. Chapter I reports a repeated incomplete contracts market experiment with asymmetric power distribution. This experiment aims to study whether and to what extent players, buyers and sellers, use private relational contracting to overcome their disadvantages of being in a weak power position. Chapter II reports a voting dictator experiment which aims to stress-test the role of voting to limit power. Chapter III reports a Chinese bribery experiment which is a follow-up study to the original German experiment conducted by Abbink and Hennig-Schmidt (2007). The experiment aims to study Chinese subjects’ sensitivity to bribery by letting them make bribery decisions either with salient or with implicit information about the negative consequences of a bribery scenario. The results presented in this dissertation deliver an insight into the behavioral similarities and differences between Germans and Chinese under different economic and political contexts.<br /> Most economic exchanges are not based on fully contingent, explicit contracts, but rather rely on informal agreements that specify the contracting parties' obligations only imprecisely. In the labor market, contractual incompleteness is particularly widespread. Employment contracts are usually rather general agreements that specify far from all aspects of an employer-employee relationship. This dissertation aims at enhancing our understanding of behavior under contractual incompleteness, with a particular focus on workplace relationships. All chapters of the dissertation analyze situations where explicit pay-for-performance contracts are not feasible, and therefore gains from trade can only be realized if trading parties successfully make use of implicit monetary or non-monetary incentives. Chapters 1--3 concentrate on interactions that are characterized by moral hazard. It is analyzed whether and how trust and social preferences can help mitigating these problems. Chapter 1 studies the intrapersonal relationship between trust and reciprocity and explores to what extent heterogeneity in individuals' reciprocal inclination can account for commonly observed differences in trusting behavior. Chapter 2 deals with the question how horizontal fairness concerns impact the effectiveness of incentive schemes that are based on reciprocal gift exchange. Chapter 3 analyzes whether two common features of implicit contracts---gift exchange and relational contracting---can lead to involuntary unemployment. Chapter 4 studies incentives provided through promotion competitions. More precisely, it addresses the question how people behave in multi-stage elimination tournaments in comparison to simple, one-stage promotion contests. The results presented in this dissertation are directly relevant for questions studied in personnel and labor economics, but also contribute to understanding the interaction of economic incentives and social preferences, more generally.